Mr Crone left the company last July in the wake of the closure of the News of the World following the Milly Dowler hacking revelations.

In 2009 Mr Crone accompanied the newspaper’s then editor, Colin Myler, to the culture media and sport select committee, where he maintained the line that phone hacking was believed to have gone no further than a single “rogue reporter”.

He and Mr Myler later contradicted James Murdoch’s evidence to the committee insisting that they had informed him there was evidence that the scandal was much wider spread.

When Rupert Murdoch appeared before the Leveson Inquiry into press standards earlier this year, he appeared to implicate Mr Crone in cover up at the company, claiming a "clever lawyer and drinking pal of the journalists" had prevented employees from blowing the whistle, while shielding executives from the truth.

Mr Crone later issued a statement rebutting the allegations.

He said: "Since Rupert Murdoch’s evidence today about a lawyer who had been on the News of the World for many years can only refer to me, I am issuing the following statement.

“His assertion that I “took charge of a cover-up” in relation to phone-hacking is a shameful lie. The same applies to his assertions that I misinformed senior executives about what was going on and that I forbade people from reporting to Rebekah Brooks or to James Murdoch.

“It is perhaps no coincidence that the two people he has identified in relation to his cover-up allegations are the same two people who pointed out that his son’s evidence to the Parliamentary Select Committee last year was inaccurate.

"The fact that Mr Murdoch’s attack on Colin Myler and myself may have been personal as well as being wholly wrong greatly demeans him.”

A spokesman for Scotland Yard said: "Officers from Operation Weeting, the MPS inquiry into the hacking of telephone voicemail boxes, arrested a man in South West London this morning, Thursday 30 August.

"The 60-year-old man was arrested at his home address at approximately 06.45 hrs this morning on suspicion of conspiring to intercept communications contrary to Section 1 of the Criminal Law Act 1977. He is being interviewed at a South London police station."